Philippines Education Note JUNE 2016 | NO. 1 Increasing Investment to Improve Basic Education Outcomes in the Philippines Introduction Over the last decade, the Government of the Philippines has embarked on an ambitious education reform program to ensure that all Filipinos have the opportunity to obtain the skills that they need to play a full and productive role in society. The government has backed up these reforms, particularly over the last five years, with substantial increases in investment in the sector. As a result, access to basic education has increased, particularly for the poorest households, and the overall learning environment has improved. While these improvements have halted a long-term decline in education sector outcomes, significant challenges remain. In particular, the share of national income devoted to basic education has only recently returned to the levels of the early 2000s, and spending per student in the Philippines is still low compared to spending in other middle-income countries. These relatively low levels of spending per student are likely to have limited the scope of the improvements in education outcomes over the last decade. High school completion rates remain low compared with other countries in the region, and enrollment gaps among different socioeconomic groups persist. Stakeholders frequently express concerns about the quality of the education provided and about the level and breadth of skills that children possess when they leave school. The purpose of this note is to investigate whether the recent increases in the financing for basic education This note is part of a series outlining analysis and have improved education outcomes and to identify results from the Philippines Public Expenditure any factors that may be constraining the effectiveness Tracking and Quantitative Service Delivery Study of public spending. It concludes that further increases conducted by the Department of Education and in public spending will be needed if the government’s ambitious goals for the education sector for the next five the World Bank with the support of the Australian years are to be achieved. However, increased investment Government through the Australia-World Bank will not be enough on its own. It will also be necessary Philippines Development Trust Fund. to ensure that these resources are used effectively. WWW.WORLDBANK.ORG/PH 1 Increasing Investment to Improve Basic Education Outcomes in the Philippines How has Public Education Expenditure Changed Over the Last 12 Years? In the first half of the 2000s, government spending on basic The underlying factors driving the increases in basic education fell in real terms. Between 2003 and 2005 basic education spending can be broken down into two distinct education spending fell from PHP 166 billion to PHP 152 periods. Between 2005 and 2009, education spending rose billion (in 2014 prices). The share of national income devoted even though the share of education in total government to education also fell from 2.4 percent to 1.9 percent over the spending declined from 17 percent to 15 percent (Figure 1). same period. Moreover, the decline in education spending This suggests that the budget increases were driven by led to significant drops in the level of per student funding. rapid increases in the overall government budget rather Between 2003 and 2005 average annual spending per public than any renewed commitment to education itself. After elementary and high school student fell from PHP 9,500 to 2009, the drivers of increased spending are less clear PHP 8,700 in real terms.1 though overall budget growth and increases in the share devoted to the education budget both played a role. This downward trend was halted in 2005, and since then However, the share of the total budget devoted to basic government spending on basic education has increased education in 2014 was still lower than the share that considerably. Between 2005 and 2014, national government prevailed in the early 2000s. spending on basic education more than doubled in real terms. The share of national income devoted to education While the turnaround in government spending has been also increased and, by 2014, had reached 2.2 percent of GDP. impressive, the share of national income devoted to basic Spending per student followed a similar pattern; by 2013 education has only recently returned to the levels of the average spending per public elementary and high school early 2000s. Budget forecasts predict that the share of student was PHP 12,800 in real terms, an increase of almost national income devoted to basic education in 2015 will 50 percent from the level in 2005. have exceeded 2.4 percent for the first time since 2003. Public Education Spending has Risen Rapidly in Recent Years Figure 1:  Government Spending on Basic education, 2003 to 2015 (in 2014 constant prices) 400 18.6 20% 350 16.9 16.4 17.0 16.6 17.9 16.0 16.4 16.1 15.2 15.1 15.1 15.3 300 15% PHP billion (2014 prices) 250 200 10% 150 100 5% 2.4 2.1 1.9 1.9 2.1 2.0 2.2 2.2 2.3 2.1 2.3 2.2 2.6 50 0 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 National government National govt. as % of GDP (RHS) Local government National govt. as % of total govt. spend Sources: National government spending—DBM National Expenditure Program. Local government education spending—Bureau of Local Government Finance. GDP and GDP deflator—Philippines Statistics Authority. Notes: Basic education spending data are obligations except for 2015 where adjusted amounts are reported. Basic education refers to the DepEd budget and obligations for the Philippines Science High School. Local government spending figures are obligations but from 2014 only include spending from the Special Education Fund. The total government expenditure figures used to calculate the share of education spending exclude interest payments. 2 WWW.WORLDBANK.ORG/PH Spending by local governments makes up only a small require greater education investments. However, in the proportion of overall basic education spending in the Philippines, levels of government spending on basic Philippines and has not changed much in recent times education are only weakly correlated with regional and (Figure 1).2 Local government spending mostly comes provincial levels of poverty. For example, Region 12 is from the Special Education Fund (SEF), which is financed one of the poorest regions in the Philippines but receives from a 1 percent surcharge on property taxes.3 Since 2003, a budget for basic education that is below the national local governments have contributed an annual average of average (Figure 2). PHP 16 billion in basic education funding, but since central government spending has increased rapidly over the The public basic education system is also funded by same period, local government funding as a share of total contributions from households and the private sector. education spending has declined rapidly. Between 2003 Only limited information is available on household and 2014 the share of local government spending in total contributions to the public education system, but the public education spending fell from 9 percent to 5 percent. available evidence suggests that these contributions may be considerable. One limitation is that household Geographical disparities in public basic education spending surveys cannot distinguish spending on different are quite large and are not strongly associated with levels education levels or on public versus private schools.6 of poverty.4 For example, spending per school-aged Estimates for 2006 based on available sources suggest child in the Philippines varies from around PHP 4,500 in that household spending might be as high as one- National Capital Region (NCR) to just over PHP 7,600 in the third of government education spending.7 Partnerships Cordillera Administrative Region (Figure 2). Moreover, on between schools and private sector corporations or NGOs some disparity measures, these regional differences appear may also be a significant source of funding, but little to have increased between 2005 and 2012.5 Regional consistent information is available on these contributions. and provincial poverty levels can sometimes provide a A recent survey of elementary and high schools found useful proxy for the size of educational deficits with those that community and other non-government sources regions or provinces with higher levels of poverty being contributed approximately 13 percent of average school- likely to have weaker education outcomes and thus to level finances in 2010.8  here are Large Disparities in Education Spending across the Philippines Figure 2: T Per Capita Government Spending on Basic Education by Region and Province and Poverty Incidence, 2012 Regional Provincial 40% 60% XII VIII IX X 50% CARAGA Poverty incidence, 2012 (%) Poverty incidence, 2012 (%) 30% V average XI VII 40% poverty IV-B incidence VI 20% CAR 30% II average poverty incidence I 20% 10% II IV-A 10% average per-capita average per-capita NCR spending spending 0% 0% 4,000 5,000 6,000 7,000 8,000 3,500 5,500 7,500 9,500 Per capita basic education appropriations, 2012 Per capita basic education appropriations, 2012 Sources: Poverty incidence and population data come from the Philippines Statistical Authority. Data on appropriations come from the General Appropriations Act. Note: Per capita basic education appropriations are nominal appropriations per child aged between 5 and 19. Poverty incidence and appropriations data are for 2012 and population data is for 2010. Autonomous Region in Muslim Mindanao is not included. PHILIPPINES EDUCATION NOTE 3 Increasing Investment to Improve Basic Education Outcomes in the Philippines Despite recent increases in public education spending, developing economies. The Philippines spends less per the Government of the Philippines still devotes a smaller student as a share of per capita GNP than most middle- share of its national income to basic education than other income countries (Figure 4). Per capita differences also mask middle-income countries and its regional competitors significant differences in absolute levels of spending. For (Figure 3).9 In 2014, it devoted just under 3 percent of example, based on purchasing power parity conversions, GNP to public education spending compared to a 2012 the Philippines spent only US$380 per elementary student average for lower-middle-income countries of nearly 5 compared to US$760 in Viet Nam and US$2,350 in Malaysia. percent. In East Asia, the Government of the Philippines devotes a similar share of its national income to education A recent study by the Department of Education (DepEd) as Cambodia but significantly less than Malaysia, Thailand, explored the question of the resources that will be needed and Viet Nam. The low share of national income devoted to fund various different expansion and quality improvement to education is partly the result of the lower priority given scenarios associated with achieving government goals for to education by policymakers in the Philippines than in the sector.10 The study highlighted the need for a larger some other countries in the region (Figure 3). However, it is share of GDP to be spent on basic education if it is to be also due to the lower share of total government spending made accessible to all and to ensure modest improvements in national income in the Philippines than in other in education quality. An earlier study by the World Bank comparable countries. and AusAID also showed that it would take more than 6 percent of GDP to implement a broad package of quality Low overall public education spending has also translated improvements coupled with similar enrollment expansion into lower levels of per student spending than in other targets as the Department of Education study.11  he Philippines Spends Less on Education than Many Other Countries Figure 3: T Public Spending on Education as a Share of GNP and Total Government Spending, Selected Countries, 2012 Viet Nam Thailand Malaysia Republic of Korea Thailand Viet Nam High income Malaysia Higher middle income Singapore Republic of Korea Indonesia Lower middle income Philippines Low income Lower middle income Singapore Low income Lao Higher middle income Indonesia Lao Cambodia Cambodia Philippines High income 0 2 4 6 8 0 10 20 30 40 Percentage of GNP Percentage of total government expenditure Basic Tertiary Sources: Figure 1 and UNESCO Global Monitoring Report 2015. Notes: Information for all countries is 2012 or latest year available after 2009. Philippines data are for 2014. Total government expenditure includes interest payments. 4 WWW.WORLDBANK.ORG/PH Spending Per Basic Education Student in the Philippines Is Also Low Figure 4:  Government Spending on Education as a Share of GNP, Selected Countries, 2012 30 Primary Spending as % of GNP per capita 25 Secondary 20 15 10 5 0 Low income (1,220) Philippines (4,380) Singapore (60,110) Indonesia (4,730) Lower middle income (3,875) Malaysia (16,270) Upper middle income (10,870) Thailand (9,280) High income (31,065) Viet Nam (3,620) Republic of Korea (30,180) Sources: Authors’ calculations and UNESCO Global Monitoring Report (2010). EFA Global Monitoring Report. Education For All 2000-2015, Achievements and Challenges. Paris, UNESCO. Notes: Information for all countries is from 2012 or the latest year available after 2009. Philippines data are for 2013 and include all spending (recurrent and capital) whereas other countries only cover recurrent spending. Figures in parentheses are GNP per capita in 2012 based on purchasing power parity. What Has the Increased Investment in Basic Education Been Used For? A large proportion of the increased spending on basic proportion of public high schools that needed to schedule education has been used to increase infrastructure multiple shifts to accommodate students. Preliminary data investment and provide schools with essential inputs from DepEd suggests that between 2011 and 2014 the to improve the quality of education. These increases proportion of schools operating more than one shift fell reflect the government’s commitment to address the from 11 percent to 6.5 percent.13 Nevertheless, the average deteriorating condition of basic school infrastructure, the student-classroom ratios in both elementary and high lack of adequate teachers, and the limited availability of schools remain high. good quality textbooks and instructional materials. While the overall share of the education budget devoted to Capital spending increased from PHP 4 billion to PHP 24 salaries has declined, spending on teachers has increased billion in real terms (2014 constant prices) between 2005 in real terms. In 2005, approximately 90 percent of all basic and 2013, and its share in total spending increased from education spending was spent on salaries, but by 2013 2 percent to 9 percent. In practice, this yielded a large salary spending accounted for only 81 percent.14 Despite increase in the resources available for school construction this declining share, salary spending increased in real terms and repair. Between 2005 and 2013 spending on from PHP 135 billion to PHP 217 billion between 2005 and school construction increased by a factor of five in real 2013 (2014 prices). These increases were largely the result terms from PHP 2.8 billion to PHP 14.6 billion.12 This of schools hiring new teachers to ensure that they had trend mostly became evident after 2010 and has been adequate teachers and to reduce class sizes. New teacher reflected in the declining student-classroom ratios in hiring has had the greatest impact at the high school level both elementary and high schools across the country where it has resulted in a decline in the student-teacher ratio (Figure 5). Increased capital investment also reduced the from 40:1 in 2005 to 27:1 in 2014 (Figure 5).15 PHILIPPINES EDUCATION NOTE 5 Increasing Investment to Improve Basic Education Outcomes in the Philippines Increased Education Spending has Improved the School Learning Environment Figure 5:  Public Student-teacher and Student-classroom Ratios, 2005–2013 Student-teacher ratio Student-classroom ratio 80 80 70 70 60 60 50 50 40 40 30 30 20 20 10 10 0 0 2004 2006 2008 2010 2012 2014 2004 2006 2008 2010 2012 2014 Elementary School High School Elementary School High School Sources: DepEd Fact Sheet and Enhanced Basic Education Information System (EBEIS) Notes: Figures only include public enrollment and teachers although over this period local government and volunteer teachers also taught in public schools. For example, prior to 2012 all kindergarten teachers in public schools were classified as volunteer teachers and are not included in the reported data. Classroom ratios are based on the total number of rooms used for teaching rather than on the total number of rooms in the school. There have also been large increases in spending on main- other instructional materials also increased, indicating the high tenance and operating expenses in schools. Between 2005 priority that DepEd has given to critical infrastructure and qual- and 2013 spending on maintenance and operating expenses ity inputs for the sector over the last decade. increased from PHP 12 billion to PHP 28 billion in real terms. The share of this spending in the total budget increased from The nationwide improvements documented in this section around 8 percent in 2005 to 10 percent in 2013. At the same conceal significant disparities across regions in key educa- time, the government transferred a greater share of operating tion inputs (Figure 6). Region IV-A and NCR tend to have high funds directly to schools to enable them to make their own student-teacher and student-classroom ratios, while those in spending decisions. Specifically, the government introduced CAR tend to be relatively low. This partly reflects differences in the Boncodin formula in 2013 by which maintenance and population density, with NCR and Region IV-A being mainly operating expenses are now allocated to schools on the basis urban areas with very large schools compared to CAR, which is of student numbers and other school characteristics and pro- mainly rural with many small schools. However, differences in vided to them directly. As a result, the amount of maintenance key inputs are also driven by differences in per capita budget and operating funds allocated directly to schools nearly trebled funding. For example, Region IV-A has some of the poorest in real terms between 2005 and 2013 from PHP 4 billion to PHP input ratios as well as one of the lowest per capita allocations 12 billion. Over the same period, spending on textbooks and for basic education.16 6 WWW.WORLDBANK.ORG/PH Regional Disparities Exist in Levels of Financing and Key Education Inputs Figure 6:  Student-teacher and Student-classroom Ratios and Per Capita Basic Education Spending, 2012 Student-teacher ratio Student-classroom ratio 40 80 IV-A NCR average per-capita VII 70 spending 35 NCR XI 60 XII II V 30 50 XI CARAGA XII IV-A V VI II 40 average student- VIII I VI I CAR 25 VII teacher ratio 30 II CAR average student- VIII II 20 20 classroom ratio CARAGA average per-capita 10 spending 15 0 4,000 5,000 6,000 7,000 8,000 4,000 5,000 6,000 7,000 8,000 Average basic education spending per capita Average basic education spending per capita (students aged 5–19), 2012 (students aged 5–19), 2012 Sources: DepEd Enhanced Basic Education Information System (EBEIS) and DBM GAA Notes: Per capita basic education spending is total regional appropriations (nominal) per child aged between 5 and 19. Autonomous Region in Muslim Mindanao (ARMM) is not included. How Has the Increased Investment Affected Education Outcomes? This section explores how the increased availability of key almost doubled between 2005 and 2013, and approximately inputs has affected educational outcomes. It is important two-thirds of all five year olds are now attending to keep in mind that it may take time before recent kindergarten.18 The largest increases in kindergarten improvements in school learning environments are reflected enrollment have been concentrated among the poorest in national education achievement averages. For example, and most vulnerable sections of society. In 2008, the gross the latest available information on national examination enrollment rate in kindergarten for the poorest 20 percent results is for students who started school at a time when of the population was 33 percent, but this had increased the education system was only beginning to recover from to 63 percent by 2013. Levels of kindergarten enrollment a long-term decline in academic outcomes. Later cohorts in the Philippines now compare favorably with rates in of children are likely to benefit to a greater extent from other middle-income countries both within the region and improved funding, and it is reasonable to expect that their globally. learning outcomes will be better than those achieved by students leaving elementary and high school today.17 On the whole, elementary and high school enrollment rates have been on an upward trend since the end of the Access and School Completion Rates first decade of the 2000s. At the beginning of the 2000s, elementary net enrollment rates continued to fall as Enrollment in kindergarten has expanded rapidly since the population increases outpaced enrollment growth. However, mid-2000s, which has largely been the result of increased since 2008 elementary enrollment rates have been on an public sector provision. In many countries, early childhood upward trend (Figure 7). Between 2009 and 2012, more than education has yielded higher learning achievement and half a million additional children enrolled in elementary improved life outcomes for children when they enter the school, and the net enrollment rate increased from 90 labor force. In the Philippines, kindergarten enrollment percent to 95 percent. PHILIPPINES EDUCATION NOTE 7 Increasing Investment to Improve Basic Education Outcomes in the Philippines Access and Attainment Indicators have Shown Modest Improvements Recently Figure 7:  Gross and Net Enrollment Rates, and Completion Rates, 2005-2012 Enrollment rates Completion rates 120% 80% 100% 75% 80% 70% 60% 65% 40% 60% 20% 55% 0% 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 2010 2011 2012 50% 2005 2006 2007 2008 2009 2010 2011 2012 Elementary School High School Net enrollment rate Gross enrollment rate Elementary School High School Source: DepEd (2015). DepEd Fact Sheet 2013. DepEd. Manila. Note: The completion rate is the percentage of first year entrants who complete the full education cycle. Over a similar period, high school enrollment also the poorest 20 percent of households was only 53 percent expanded, and by 2013 some 300,000 additional children compared to a rate of 81 percent for those in the wealthiest were continuing their education beyond elementary school household quintile. compared to 2005. This resulted in the net enrollment rate increasing from 60 percent to 65 percent between 2009 After some initial improvement, school completion rates and 2013.19 The Philippines compares favorably with other have remained relatively stagnant since 2007 (Figure 7). countries in terms of enrollment in the first four years of It is important to note that completion rates reflect past secondary schooling. However, most other middle-income investments in education. The 2012 data shown in Figure 7 countries have already extended secondary education relate to students who entered the system in 2006 before level to encompass six years, which the Government of the many of the sector improvements outlined in the previous Philippines plans to follow in 2016. section came to fruition. The cohort survival rate is a more synthetic measure of school completion and reflects Although most recent enrollment gains have been changes in the education system more quickly.20 However, concentrated among the poorest children, socioeconomic cohort survival rates have also remained stable since 2005, disparities remain large at the high school level. World with approximately three-quarters of all students starting Bank estimates using data from the Annual Poverty elementary or high school being expected to complete the Indicators Survey (APIS) show that high school net cycle. Recent studies have pointed to high repetition rates, enrollment rates for those in the poorest quintile increased particularly in Grade 1, as a major explanatory factor for why from 45 percent in 2002 to 53 percent in 2013, while rates one in four children drop out of school before completing.21 remained relatively stable for the wealthier groups in the population. Differences in net enrollment rates across the Education Quality income distribution have narrowed considerably at the kindergarten level and have been virtually eliminated at The Philippines last participated in an international learning the elementary level. However, socioeconomic disparities assessment in 2003.22 The results showed that only around in enrollment at the high school level remain high. In one-third of elementary and secondary school students 2013, the high school net enrollment rate for children in were able to reach the lowest international benchmark in 8 WWW.WORLDBANK.ORG/PH Differences in Learning Achievement across Regions are Generally Small Figure 8:  National Achievement Test Scores by Region (%), 2011 Grade 6 Year 4 80% 80% 70% 70% 60% 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% ARMM NCR IV-A I CAR VII VI XI II IX X III XII IV-B VIII CARAGA ARMM I IV-A II XII XI IX X CAR NCR VI III IV-B VII VIII CARAGA V V Source: DepEd mathematics. Differences among socioeconomic groups has been any significant improvement in overall learning were also stark. In secondary school, only 23 percent of the achievement in recent times. poorest children achieved the lowest benchmark compared to 60 percent of the wealthiest children. Differences among regions in elementary and high school student achievement are relatively small except in a limited Since 2003, national examination scores have improved but number of regions (Figure 8). Students in Caraga tend to it is unclear whether these improvements have changed perform better than most students in the Philippines while the overall picture on learning significantly. Average scores students in Autonomous Region in Muslim Mindanao on the national achievement test rose significantly between (ARMM) score relatively poorly. Differences among regions 2006 and 2008, reaching a high of 69 percent, but have tend to be similar across elementary and high schools with remained stagnant since.23 However, it is not clear how some exceptions. Most notably, elementary school students comparable these achievement tests are from year to year in NCR rank 16 out of the 17 regions, while high school which makes these increases difficult to interpret. High students rank seventh. There is little correlation between school achievement results have remained relatively stable levels of student achievement and per capita spending on over the last 10 years, although overall scores are only basic education. In some cases (for example, Caraga), basic slightly above 50 percent. While issues of comparability education spending and learning achievement is high and in make it difficult to make strong statements about trends, other cases achievement is low despite above average basic the national achievement scores do not suggest that there education spending (for example, in Region I). PHILIPPINES EDUCATION NOTE 9 Increasing Investment to Improve Basic Education Outcomes in the Philippines How Does the Public Financial Management System Affect the Link between Spending and Education Outcomes? Whether the public financial and resource management a missed opportunity to raise education outcomes further. systems allocate resources effectively is a vital element Second, approximately one-fifth of all capital outlay in translating increases in public sector investment into resources, including those for school construction and improved education outcomes. These systems transform rehabilitation, go unspent annually. This is a real cause for sector objectives and policies into budget allocations that concern given the high student-classroom ratios, particularly are used to finance the inputs and programs necessary in high schools, and the general poor state of much of the to deliver good quality education services. The overall existing infrastructure (see Figure 5).24 level of funding, the level of administration or agency using resources, and the management and governance Several factors are likely to contribute to these low execution arrangements for these resources are key determinants rates. A recent review by the World Bank and AusAID of education outcomes. A number of recent studies have of existing studies both in the Philippines and in other pointed to weaknesses in these systems in the Philippines countries has identified a number of factors that may lead to that may limit the overall impact of the recent increases in low budget execution rates:25 sector spending. ¾¾ Delays in fund releases and allocations. Delays in the Not all of the increased government allocation to the release of allocations for some budget items mean that education sector has been spent in recent years because local education offices and schools often receive funds of low budget execution rates. The overall execution rate late or not at all. When allocations are received late, they for basic education has fluctuated over the last 10 years, have insufficient time to follow procurement rules and but in 2013 it was lower than in 2009 (Figure 9). Execution properly account for their use of funds before the end of rates vary among key education inputs. First, rates for the fiscal year.26 maintenance and operating expenses have been falling since 2009. Less than three-quarters of the funds allocated ¾¾ Incomplete transfer of funds between levels. In other to this category in 2013 were actually spent. Given that cases, there are delays in the transferring of funds from this budget category provides local education offices and regional and division offices of DepEd to schools. For schools with funding for important activities such as teacher example, in 2011, a small-scale survey showed that training and the purchase of school supplies, this represents approximately one-quarter of schools did not receive Budget Execution Rates are Low for Some Key Categories of Expenditure Figure 9:  Budget Execution Rates for Basic Education Spending, 2006-2013 100% 90% 80% 70% 60% 50% 40% 2006 2007 2008 2009 2010 2011 2012 2013 Personnel Capital Outlays Maintenance and Operating Expenses Total Source: DepEd Statement of Allotments, Obligations and Balances (SAOBs) for each year. Note: Budget execution rates are defined as obligations as a percentage of allotments. 10 WWW.WORLDBANK.ORG/PH any resources for maintenance and other operating ¾¾ A lack of vertical coordination between national and local expenses (MOOE) despite increases in overall school government education spending. There is relatively little allocations.27 coordination between central and local government funding of basic education. While relatively little is ¾¾ Difficulties at the school level in reporting on self-managed known about this, there is significant potential for funds. Schools frequently find it difficult to account duplication and wastage of resources due to this lack for how they have used the monthly funds that they of effective coordination, which is likely to be another receive to cover their maintenance and operating factor driving regional inequalities in spending and expenses. This is particularly the case for schools in ultimately in education outcomes. remote areas and with no dedicated accounting staff. When they are unable to produce these reports, the ¾¾ School governance. How schools manage their financial DepEd division office must withhold any subsequent funds, which are often left unspent. and human resources has been shown to be a key determinant of the effectiveness of public spending. ¾¾ Inadequate coordination between implementing units. Schools that are managed and governed well tend A significant part of the basic education budget to make better decisions and have better student for school construction and repair is implemented outcomes. Evidence suggests that, while some elements through the Department of Public Works and Highways of effective school-based management are in place in (DPWH). This has significantly increased the workload schools in the Philippines (such as school improvement of the agency and has emphasized the need for close planning), others are still lacking (such as community collaboration with DepEd. In some cases, the absence participation and autonomy).29 of this necessary coordination has led to differences in budgeted and actual funding needs, which have in turn led to project delays and poor budget execution. Summary Inefficient and ineffective spending can compound The Government of the Philippines has made significant low execution rates to further weaken the impact of increased education spending on outcomes. A recent efforts to increase public investment in education to public expenditure review by the World Bank and AusAID expand access and raise education quality. This note also highlighted some potential areas of inefficiency in has shown that recent increases have led to modest government education spending that included:28 improvements in key education inputs and outcomes. However, it has also found that additional investment will ¾¾ Complexity and lack of transparency in administrative be needed to build on these recent gains, particularly in procedures for fund allocation. Fund flows in the schools and locations serving poor and disadvantaged education system are complex, and key staff are communities. Moreover, recent studies have raised frequently unaware of the rules used to allocate concerns about the effectiveness of existing systems resources. For example, school principals are typically to allocate and manage the increased resources. In unaware of the formula that determines how their maintenance and operating expenses are allocated. This particular, the World Bank’s recent public education limits accountability and prevents schools from being expenditure review concluded that merely increasing able to plan effectively. allocations to the sector is unlikely to produce significant improvements in outcomes. ¾¾ Rigid norms for the allocation, release, and use of resources. School principals frequently complain about the These findings suggest that tackling spending ineffi- restrictions imposed on the use of their operating funds. ciencies has the potential to raise education outcomes The prohibition on using these funds for laptops, LCD both by using existing resources better and by ensuring projectors, and other instructional equipment because that further funding increases are used effectively. While they are classified as capital goods unnecessarily recent studies have highlighted many of the potential restricts school autonomy. Rules for authorizing new constraints to more efficient resource use, more detailed classroom construction are inflexible and frequently analytical work is needed to explore the main drivers of do not adequately identify the needs of schools in efficiency and inequality and to identify the changes that remote and mountainous regions. These rules may be a will be needed to increase the effectiveness of public significant factor in the regional inequalities in student- education investments. classroom ratios documented in Section 3. PHILIPPINES EDUCATION NOTE 11 Increasing Investment to Improve Basic Education Outcomes in the Philippines Endnotes 16 While differences between regions in student-teacher and student-classroom ratios are wide, they have largely narrowed over the last 10 years. In particular, inequalities in student-teacher 1 Per student spending includes kindergarten. ratios at the high school level and student-classroom ratios at the 2 Local governments support the delivery of basic education elementary level have declined relatively rapidly since 2006. services by establishing and funding local school boards. 17 Previous analysis conducted by the World Bank and AusAID in 3 National guidelines require that SEF funds be used for school 2010 showed that adequate funding of teachers and classrooms maintenance and operating expenditures, construction, and is a key determinant of achievement in the Philippines context. sports. Some local governments also use their general funds See World Bank and AusAID (2010), “Philippines Basic Education to provide additional financial support to local school boards. Public Expenditure Review.” World Bank and AusAID, Manila. 4 Assistance from development partners is not generally 18 These are the author’s calculations using household data included in the spending data used to construct regional from the Annual Poverty Indicators Survey (APIS) for both the aggregates. “kindergarten” and “preparatory” categories. Calculations by the authors using DepEd kindergarten enrollment figures and 5 The standard deviation of per capita regional spending UNESCO’s population estimates show that the overall gross increased from 783 to 1,833 between 2005 and 2013. kindergarten enrollment rate increased from 52 percent in 2009 6 In 2012/2013, 91 percent of elementary school students to 99 percent in 2013. attended government primary schools and 80 percent 19 Net enrollment rates estimated by the authors using APIS attended government high schools. household data suggest a more moderate increase in high school 7 World Bank and AusAID (2010). “Philippines Basic Education net enrollment from 66 percent in 2008 to 68 percent in 2013. Public Expenditure Review.” World Bank and AusAID, Manila. 20 The cohort survival rate is the percentage of a cohort of students 8 World Bank and AusAID (2013). “School-based Management in the first grade in a given school year that is expected to survive in the Philippines: An Empirical Investigation.” World Bank and to the last grade. AusAID, Manila. 21 World Bank and AusAID (2010). “Philippines Basic Education Public 9 GNP is significantly larger than GDP in the Philippines, Expenditure Review.” World Bank and AusAID, Manila. but country rankings remain unchanged if spending as a 22 See, for example, Mullis, I., Martin, M., Gonzalez, E. and S. proportion of GDP is used, with the exception of Cambodia, Chrostowski (2004). “TIMSS 2003 International Mathematics which then moves below the Philippines. It is preferable to Report.” International Study Center, Boston College, Lynch School use GNP because it allows the inclusion of the averages for of Education, Boston. country income groupings in Figure 3. 23 There have been some notable increases in achievement in some 10 DepEd (2013). “Medium-term Expenditure Framework for subjects. For example, average scores in grade 6 elementary Basic Education 2014-2020: Enrollment Projections and Cost science and English scores increased by 8 and 5 percentage Simulations under Alternative Scenarios.” Department of points respectively between 2007 and 2012. Education, Manila. 24 The execution rates in Figure 9 may be underestimated because 11 World Bank and AusAID (2010). “Philippines Basic Education capital allocations can be carried over from one year to the Public Expenditure Review.” World Bank and AusAID, Manila. following year. However, they provide a good measure of what 12 These are appropriations and exclude an additional PHP proportion of an appropriation tends to be used in a single year. 14 billion of school construction funds included in the 25 World Bank and AusAID (2010). “Philippines Basic Education Public Department of Public Works and Highways (DPWH) budget Expenditure Review.” World Bank and AusAID, Manila. for 2013. 26 This appears to be a particular issue with centralized lump sum 13 Approximately 3 percent of all public elementary schools releases such as the School-based Management Grants. organize their schedules around multiple shifts, and this has not changed much in recent years. 27 World Bank and AusAID (2013). “School-based Management in the Philippines: An Empirical Investigation.” World Bank and 14 According to UNESCO statistics, the proportion of the total AusAID, Manila. basic education budget in the Philippines devoted to salaries is similar to those in other neighboring countries. 28 World Bank and AusAID (2010). “Philippines Basic Education Public Expenditure Review.” World Bank and AusAID, Manila. 15 Student-teacher ratios at the elementary level remained stable because increases in the number of teachers were 29 World Bank and AusAID (2013). “School-based Management offset by increases in student numbers during the in the Philippines: An Empirical Investigation.” World Bank and same period. AusAID, Manila. 12 WWW.WORLDBANK.ORG/PH